Regal rises despite denying Shell bid

Regal Petroleum has had a colourful history - a much-hyped well in the Adriatic produced more water than oil, the founder, Frank Timis, was ousted but remains a major shareholder, it ran into trouble with the Stock Exchange over disclosure of price sensitive information, and so on.

Today brought another chapter in the continuing saga when regal's shares jumped nearly 40% early on after reports that it had received a $1.2bn takeover approach - around 300p a share - from Royal Dutch Shell.

The current chief executive, David Greer, is an ex-Shell executive and Regal ditched a deal to sell Shell a 51% stake in its Ukrainian gas fields late last year.

Things have rarely been straightforward with Regal, however, and it has issued a statement saying no approach had been received from Shell.

Unsurprisingly, the shares have now come off their best levels, but are still up 29p at 112p.

The tale seems to have convinced investors there is hidden value in the company. Analysts at Fox Davies said Regal was an attractive bid target for an independent oil business or one of the majors, and have a 370p price target on the shares.

Back with Taylor Wimpey: its shares have declined further as investors mull over the delay to finalising its bank covenants. They are now down 2.5p at 32p.

In a sell note, Robin Hardy, at KBC Peel Hunt, said the statement that the banks intended to agree replacing Taylor's covenants was "hardly encouraging".

"That the discussions have extended to the holders of the traded Eurobonds is a further cause for concern," he added.

"Largely, the bonds were outside this discussion as they have no direct interest cover covenants, only cross-defaults from other debt issues.

"There is a loan to value provision, however, within the bonds' covenants. Having to hold discussions with the bondholders suggests either that the LTV will be breached (100% gearing is the limit), and this might suggest another £500-£700m of provisions against land.

"Or perhaps the negotiations with the US private placement debt holders are, as we had always expected, going badly and that the cross-default is now likely.

"As we have presented in recent notes, the banks have the possibility that money can be recovered better from a failure of the business rather than opting to support equity shareholders of Taylor Wimpey.

"With the credit market tightening, it is increasingly clear to us that, if the company does agree a new structure, it will be massively in the lenders' favour and bad news for the shareholders.

"We believe the banks can pretty much ask for anything in this climate and any structure will be focused on them looking after number one and not the shareholders of another business.

"(There is) still a great deal of risk and potential dilution to shareholders' equity. We remain a seller."

Elsewhere, the market continues to tick along, awaiting the key US news on jobless figures and the $700bn bank bail-out.